Question: A large, profitable commercial airline company flies 737-type aircraft, each with a maximum seating capacity of 132 passengers. Company literature states that the economic breakeven point with these aircraft is 62 passengers.
a. Draw a conceptual graph to show total revenue and total costs that this company is experiencing.
b. Identify three types of fixed costs that the airline should carefully examine to lower its breakeven point. Explain your reasoning.
c. Identify three types of variable costs that can possibly be reduced to lower the breakeven point. Why did you select these cost items?